Summary of Candle Range Theory Explained and Simplified | Easily Predict the Next Candle

Main Ideas and Concepts

• Candle Range Theory (CRT):

  CRT is an advanced trading concept that helps predict price movements and candle formations by analyzing ranges created by candlesticks. Each candlestick represents a range of price action, and understanding these ranges can help traders align with institutional trading patterns.

• Market Phases:

  The market cycles through three main phases: Accumulation, Manipulation, and Distribution (referred to as the "Power of Three").

  • Accumulation: Price moves sideways, gathering momentum.
  • Manipulation: Price takes out liquidity, often by spiking to new highs or lows.
  • Distribution: Price moves in the direction of the prevailing trend, completing the cycle.
• Identifying CRT Patterns:

  CRT patterns can be identified using candlestick sequences, often involving three candles on higher time frames. The first candle establishes a range, the second candle manipulates by taking out liquidity, and the third candle breaks out of the established range.

• Time Frames and Entry Strategies:

  Use specific time frames to identify CRTs and execute trades:

  • Monthly CRTs → Daily entry
  • Daily CRTs → 1-hour entry
  • 4-hour CRTs → 15-minute entry
  • 1-hour CRTs → 5-minute or 1-minute entry

  Key trading times in the Forex market are specified for higher probability trades.

• Practical Application:

  The video provides examples of how to identify and execute trades based on CRT models using specific charts and scenarios. Traders are guided on setting entry points, stop-loss levels, and take-profit targets based on the identified CRT patterns.

Detailed Instructions for Identifying and Trading CRTs

• Identify Key Levels: Look for CRTs around significant price levels on higher time frames.
• Monitor Key Times: Pay attention to specific times in the Forex market for higher probability setups (1:00 a.m., 5:00 a.m., 9:00 a.m., 1:00 p.m., 3:00 p.m., 6:00 p.m., 9:00 p.m.).
• Entry Time Frame: Match your entry time frame to the identified CRT’s time frame:
  • Monthly → Daily
  • Daily → 1-hour
  • 4-hour → 15-minute
  • 1-hour → 5-minute or 1-minute
  • 15-minute → 1-minute for entry
• Example Execution: Highlight the high and low of the CRT range candle. Wait for a confirming candle that sweeps below the range before reversing direction. Enter trades based on order blocks identified on lower time frames.
• Take Profit Strategies: Set take-profit at the midpoint of the range for a conservative approach (2:1 reward to risk). Aim for the highest point of the range for a more aggressive target (higher reward to risk ratio).

Featured Speakers/Sources

• The video is presented by a channel called "Smart Risk," although individual speakers are not specifically named in the subtitles.

Notable Quotes

— 01:15 — « The idea is simple: every candle you see on a chart represents a range. »

— 01:55 — « Imagine it like a never-ending loop: first the price accumulates, then it gets manipulated, and finally it's distributed. »

— 05:17 — « Why? Because it perfectly captures the accumulation, manipulation, and distribution phases all within a three candle sequence. »

— 06:51 — « CRT is basically an objective and mechanical way to simplify your trading by suggesting simple steps, fixed objectives, and rules. »

— 12:30 — « We have a perfect CRT model based on this 1H hour 9 a.m. candle. »

Category

Educational

Video